Who is that Paulson? That is John Paulson, the hedge fund manager who took in a cool $15 Billion in gains last year for his fund (and $3.7 Billion personally) betting against these stupid arcane mortgage instruments, that the former head of Government Sachs (and current US Treasury Secretary) completely missed the boat on. So forgive me if I ignore Hank and listen to John. John is doing so well that he is bucking the trend of most hedge funds who are having their worst year on record, including a horrid October - he is making money even this year (notably shorting UK banks)

As negative as I am, even I am sick of writing entries of doom and gloom and am scrambling to find anything positive of note. I'd take this story from FT.com as a positive... granted the prices being offered are pennies on the dollar but I expect some fortunes to be made on the upside because if you can buy at 6 cents on the dollar and sell at 27 cents on the dollar in 3 years, well you've done good.

• John Paulson, the hedge fund manager who was called before Congress last week to discuss the big profits he made by foreseeing the collapse of the subprime mortgage market, has started to buy securities backed by residential mortgages. Mr Paulson’s move marks the latest example of a famously bearish investor shifting gears to profit from depressed prices in the global credit markets.
• According to Alpha Magazine, Mr Paulson made $3.7bn in 2007, reflecting the success of his strategy – begun in 2006 – of betting on a collapse of the subprime mortgage market. At the end of the third quarter of this year, his funds were up 15-25 per cent. His funds also made profits in October, his investors say.
• He signalled a potential new direction on October 1 by launching his Paulson Recovery Fund, which will take equity stakes in financial institutions. He also has moved to start a real estate fund.
• However, Mr Paulson has been careful to avoid moving into distressed markets too early. For example, he refused in April when approached to invest alongside TPG in Washington Mutual. The debt and equity of WaMu was wiped out when it was taken over by JPMorgan in September.
• In a letter to investors at the end of the third quarter, Mr. Paulson said his strategy was “to reduce leverage, maintain market exposure and maintain short credit bias”.